Perspective: How to turn a fast lane into a slow lane

When it comes to updating our telecom laws, we have taken our proverbial eyes off the prize.

We should be focusing on franchise reform, which would remove (in the Federal Communication Commission's own words) the "most important policy-relevant barrier to entry" for video and broadband competition and finally get the "twin titans" of the cable companies and the phone companies to duke it out.

Instead, we're becoming sidetracked by a hasty push for stringent legislation to remedy the undefined concept of Net neutrality, without careful analysis of the possible consequences.

Before imposing Net neutrality legislation, we better be sure what we mean, and we better understand its impact on industry structure.

Not only would working Americans stand to lose $8.2 billion in consumer welfare benefits if policymakers delayed meaningful franchise reform by just one year, new broadband deployment would also come to a screeching halt. Thus, instead of harvesting the fruits of competition, said policymakers would likely restore a world of monopoly and high prices.

Indeed, before imposing Net neutrality legislation, we better be sure what we mean, and we better understand its impact on industry structure.

For example, if Net neutrality means that the FCC will punish network operators who seek to sabotage competitive providers of voice over Internet Protocol (VoIP), then I support such a policy 100 percent. To its credit, not only has the FCC aggressively taken steps to stop such conduct (last year's infamous Madison River case); but it also has publicly stated, in its 2005 Net neutrality policy statement, that it has the authority to prevent network owners from blocking or degrading third-party VoIP services. Accordingly, the commission pointedly reminded all concerned that the Communications Act's fundamental goal--ensuring for all Americans "a rapid, efficient, nationwide...communication service with adequate facilities at reasonable charges"--will remain fulfilled.

Still, there's a huge analytical leap between preventing patently anticompetitive conduct and having the government tell operators how to manage their networks in the name of network neutrality. Unfortunately, as election politics loom large, many in Congress are ignoring this important distinction. They instead are seeking to rush through legislation that would essentially commoditize the Internet into a "stupid" network, without understanding the potential adverse consequences.

Should Congress heed calls to commoditize the Internet into a "stupid" network where all packets are treated identically, it could result in more industry concentration and, potentially, a return to monopoly. In contrast, the literature indicates that allowing some form of product differentiation among networks will promote more investment and innovation and help mitigate the potential for collusion among the companies left in the market.

Similarly, other research shows that if IP video services increase in popularity, providing a residential subscriber with a "stupid" network that is video-capable could cost $300 to $400 per month more than an "intelligent" network. In the real world, a network that costs that much is unlikely to get built because few consumers could afford to pay for the service.

Simply put, a "bright line" Net neutrality rule will simply do more harm than good. Network neutrality rules need to be scrutinized with a thorough cost-benefit analysis--something "stupid network" proponents have yet to do--before they are rushed into law. As David Farber, the highly respected technology chief of the FCC during the Clinton-Gore Administration, recently noted: "The thought of Congress legislating without understanding this issue scares me."

Well, me too.

It's well-known that there are no white hats in the telecommunications and Internet businesses. Yet, so long as Congress refuses to grant meaningful franchise reform without also tacking on ill-conceived Net neutrality rules, don't be surprised if we have no new broadband deployment at all--just a slow lane for everyone.

Biography
Lawrence Spiwak is president of the Phoenix Center for Advanced Legal and Economic Public Policy Studies, an international nonprofit think tank based in Washington, D.C.

More Perspectives

[Dalkorian]

nice spin

Cute. Trust the telcos, they know what's best for us all. If we
don't allow them to create a fast lane we'll all be mired in the
slow lane. They won't want to improve services because they
won't be able to legally. A fast lane on the internet means less
congestion and less traffic and shorter waits for us all.

I just wish my reality was that rosey. Must be nice.

My reality? The telcos get what they want, then start filtering
traffic through their network. Want "high speed" - pay a
premium. Can't afford it - well, get mired in all the other traffic
(that's slowed artifically to sell the "fast lane"). Soon we'll pay a
premium for high speed access, then pay a fee for the fast lane,
then a tax for the new cables that made up the fast lane, then
another service fee, then ...

Sounds good.

I think you missed the point

This is not about total bandwidth. This is about giving preferential treatment to certain types of traffic or traffic from specific sources.

If you're upset that your ISP is limiting your bandwidth then go to a different provider. That's what competition is all about.

If there are no other providers, then that's where the author's point about changing franchise laws comes in. If it becomes easier (cheaper) for other providers to enter a specific market, then you will have more choices.

[reustle]

The pain of limmited choice

In the early days when dialup was the main connection to the web there was lots of companies trying to get your busness. So ISP's were carefull about what you wanted and didn't like so you as a customer didn't goto another company and start paying someone else.

As we are well into the early stages of broadband. The old rules at present can no longer be applied.

In many areas theres perhaps one maybe two broadband providers, cable and phone company.

Bolth want to dictate what we do on the web knowing that there is very little in the way of competion if any at all.

I do not know about anyone else, but I am not paying for content, I am paying for a rocksolid consitant connection. If I want content then I'll subcribe to a service, I do not wanted it forced down a connection I pay for without my say so.

Until other techonlogies come into play at reasonbale prices and providers are allowed to give thier content we strongly need neutrality rules.

If we don't get some solid regulation we are looking at problems on the level of AT&T(before breakup) and wintel before seperation.

[Alexodia]

Heres what im Understanding

This is rediculous. Okay as i see it Ebay and Amazon are competitors. Time Warner Likes Ebay but Does not like amazon so it gives Ebay the red carpet and brings Amazon to a near stand still with slower than Dial up speeds. What does this mean. 1 The user is forced to Use Ebay if they want speedy purchase. 2 User is forced into Loop of a monoploy and cannot purchase from who they want because the speed is so rediculous. Pardon the spelling.

So for ISP's you have
A WIN WIN Situation
FOr Consumers
a Lose Lose Situation

We pay for absolutly useless service that dictates were we go not us dictating were we want to go. So without net Neutrality of some sort we are screwed as consumers.

Now if im wrong then im wrong but as i see it giving the ISP the right to charge Amazon Ebay so on so forth for priority is just not right cause that eventually leads into Censorship.